Privatize khadi retailing

This is the 50th year of the Khadi and Village Industries Commission (KVIC). Created by an Act of Parliament in 1956, the commission began operations in April 1957. It replaced the Khadi Board that had been in existence since 1920. The commission was given the task of promoting khadi and encouraging village industries.

Its primary focus was employment generation in the rural areas, a task that it has performed adequately. The Lok Sabha was informed recently that in 2006-07, KVIC generated employment in the khadi segment for 884,000 rural Indians, and it will help nearly a million rural Indians this year. A majority of the beneficiaries are Dalits and tribals, and of them, 35% are women. Unquestionably, khadi provides a source of livelihood to those who would otherwise live life in penury.

The commission was also expected to promote khadi, a task in which it has failed miserably. Sales touched Rs66.31 million in the same period, a meagre 5% more compared with the previous year. Clearly, good intentions don’t make up for the absenceof retailing chutzpah, marketing savvy and brand positioning. Unarguably, khadi sales stagnate and will plummet soon—khadi retailing is a comprehensivefailure.

This is paradoxical. In an urban India that is in love with its malls, khadi should have grown phenomenally. It hasn’t; it is dying. It isn’t that shoppers don’t love khadi. There are at least two retail brands with pan-India presence that have clearly been inspired by khadi’s appeal and have taken the concept of ethnic chic and simplicity to an altogether different level by adhering to the principle of instilling romance in retailing. On the other hand, the thousands of khadi bhandars and bhavans across India languish, with more employees than shoppers.

It is not difficult to fathom why this downturn has occurred. Most of the outlets are started each year to meet budgetary requirements (khadi promotion and production is also a state responsibility). Only a few bhandars enjoy visibility and brand recognition. And even these don’t feel the need to change with time and use consumer-friendly retailing methods. Apparently, only one of these many bhandars has a computerized billing system.

That the bhandars have lost the script is in evidence every year on 2 October. On Gandhi Jayanti, the khadi bhandars open their doors to their annual sale, when 20% rebate is offered to consumers. A 10% rebate is offered all year long. That doesn’t attract any additional footfalls. The 20% rebate does even now because the average khadi loyalist makes the annual pilgrimage to the bhandar to indulge in what is clearly an act of tokenism. The loyalist is willing to bear the adversity inflicted by the experience—and of being treated as a pest and an unnecessary evil—because of certain well-founded, long-held, but increasingly questioned beliefs. But the woolly-headed khadi loyalist has to face the systemic wrath at the khadi bhandar every 2 October. The simple act of retail—a therapeutic balm at the malls—turns into an ordeal that is almost deliberately designed to keep newcomers at bay, and test the patience of the staunchest loyalist.

It is obvious that the people in charge are oblivious to the fact that urban India has changed completely in the last decade. Young India doesn’t have the patience for inefficiency. Consumer footfalls gather momentum when there is variety, and a good bargain. But the khadi bhandars don’t offer any variety and what it does is far too expensive, even after a 20% rebate.

Most Indians would agree that the khadi movement cannot be allowed to die. If properly marketed, khadi sales can even now grow at a steady clip. What is required is making khadi relevant to the new India. The only plausible solution in such a scenario that could save khadi from extinction is that its retailing should be privatized. The bhandars were created to be a medium between the rural producers and the urban shoppers. This role has not been performed with any degree ofeffectiveness during the last three decades.

Nevertheless, there are several home-grown organized retailers in India who have started operations from scratch in the last decade or less, and who have become retail behemoths, and they have only begun to get their act in place. Surely, they would be interested in acquiring the khadi bhandars. And they would be able to run these substantially more efficiently.

What any of these entities can and will bring to the retailing of khadi is a sense of organization and purpose that is missing in the present set-up and that will be tailored to understand the needs of Young India. They have easily shown they intrinsically understand the need of the Indian consumer for value for money. They have turned non-existent names into well-known brands.

Despite the blips that a Reliance Fresh experiences sporadically, all agree that retailing is the biggest sunrise industry in India, and to revitalize a brand such as khadi would be a challenge that most of these retailers would be more than willing to accept because success is assured in the long run.

Mayank Bhatt is a writer based in Mumbai. Comments are welcome at theirview@livemint.com